I was traveling about a year ago in Mexico, and happened upon a nice looking local bar. I sat there for quite a while downing a respectable number of cervezas, and at one point I happened to glance to the bar. The dude running the place (a big dude with a beard down to his knees, sweating profusely) was watching porn on the big tv above the bar, and just when I looked over there he happened to look in my direction. That was probably the most uncomfortable, and yet amazingly hilarious eye contact I've ever experienced.
There were other patrons there as well, but they seemed completely unfazed by the situation. I guess it was a little ritual they had, or something like that. I went there three more times. What can I say, the beer and tequila were both cheap.
In conclusion, I wouldn't be offended if I happened to see someone watching something explicit in public, but at the same time I realize that it is inherently indicative of bad manners, not to mention completely lacking any kind of social awareness and consideration of others.